The RBA minutes for September 2026, published by the Reserve Bank on 13 October, explain why the Monetary Policy Board lifted the cash rate target by 25 basis points to 4.60% at its 28 and 29 September meeting. For anyone applying for a car loan or personal loan, they also show what the Board will be watching before its next decision on 2 and 3 November 2026.
The short answer: the minutes say all members agreed to raise the cash rate because several upside risks to inflation flagged in August had materialised or were building. They point to higher oil prices, global cost pressure from the AI boom and signs that the economy has less spare capacity than assumed. The Board said it would do what it considers necessary, "including increasing the cash rate target further if required".
That last line is a conditional statement, not a promise. The minutes do not say another rise is coming. They do explain why borrowers should budget with some room to spare.
What the RBA minutes for September 2026 say about the decision
The minutes record that "the Board decided unanimously to raise the cash rate target by 25 basis points to 4.60 per cent". The new target took effect on 30 September. According to the RBA's cash rate table, that was the fourth rise of 2026, after increases in February, March and May took the rate from 3.60% to 4.35%. It has risen by a full percentage point since the start of the year.
Members gave three main arguments for moving in September rather than waiting:
- Upside risks had arrived. In August the Board named three risks: a re-escalation of the Middle East conflict, inflation pressure from the global AI boom and domestic capacity being tighter than assumed. The minutes say the Middle East risk "had since crystallised", with oil prices "significantly higher" than assumed in the August forecasts.
- Waiting could cost more. Inflation had been above target for an extended period, and liaison and surveys pointed to a growing risk that business inflation expectations were rising.
- The old setting may not be enough. If the neutral interest rate has moved higher, a 4.35% cash rate is less restrictive than it was two years earlier.
The Board also considered leaving the rate unchanged. The case for holding rested on falling housing prices hurting spending more than expected, uncertainty from the Middle East conflict weighing on demand, and earlier rate rises having a bigger effect than forecast. Members judged those risks did not outweigh the case for a rise.
Why the RBA is worried about inflation
The minutes give some useful detail on cost pressures that flow straight into household budgets. Domestic petrol and diesel prices were 13% higher than the staff had forecast in August. The share of items in the consumer price index rising by more than 2.5% was "well above average". Business liaison reported "widespread reports of elevated cost growth", with few firms expecting those pressures to ease much over the year ahead.
The staff's preliminary view was that the stronger July inflation result reflected domestic capacity pressure more than the pass-through of conflict-related costs. In plain terms, the RBA thinks demand in the economy is running ahead of what it can supply. That is the kind of inflation the cash rate is designed to address.
For a loan applicant, the practical point is that fuel, insurance and other running costs are part of the expenses a lender assesses. If those costs keep rising, the surplus left in your budget after repayments gets smaller. Our guide to how living costs affect car loan serviceability explains how lenders weigh that surplus, and our piece on August 2026 inflation and your car loan budget covers the latest monthly figures.
What the minutes say about jobs, growth and housing
The economy is slowing, but not sharply. The minutes note that:
- The unemployment rate rose to 4.6% in August, alongside higher participation, though members urged caution because of methodology changes to the labour force survey. Our August unemployment explainer covers what that means for applicants.
- GDP growth in the June quarter was a little stronger than expected, driven by private business investment, which rose by more than 10% over the year.
- Household consumption growth slowed to a below-trend pace in the first half of 2026, and members said it would need to stay subdued for some time if inflation is to return to target.
- Housing prices fell by more than expected and new housing loan commitments fell sharply, led by lending to investors.
The housing detail matters for borrowing power. Scheduled mortgage payments had risen to around 10% of household disposable income, around their 2024 peak. If you hold a home loan as well as a car loan, a higher mortgage repayment reduces what a lender sees as available for new debt. Our article on the home loan rate rises that started on 9 October walks through that link.
Are borrowers coping?
The September meeting included the Board's semi-annual financial stability discussion, which lines up with the RBA Financial Stability Review for October 2026. The minutes say household balance sheets "generally remained sound":
- Housing loan arrears were low and impairments were around historical lows.
- Less than 2% of owner-occupier borrowers were estimated to face a cash flow shortfall, well below the 2023 to 2024 peak.
- The median mortgage borrower held savings equal to just under one year of scheduled repayments in the lowest income group, and almost two years in the highest.
The minutes also acknowledge that some borrowers dealing with cost-of-living pressure were cutting back on discretionary spending, and that lower-income renters were more likely to be under financial pressure. Averages hide a lot. A healthy national picture does not mean every application will be assessed the same way.
What markets expected at the time of the meeting
The minutes record that, at the time of the meeting, market pricing implied an expectation of a further increase of around 15 basis points by the end of 2026 and another 30 basis points in the first half of 2027. That is what financial markets were pricing, not an RBA forecast or commitment, and market pricing changes as new data arrives. It is a reason to plan for rates that may move, rather than a prediction you should rely on.
What it means for your car loan or personal loan
The cash rate is not the rate on your car loan. Lenders set their own pricing, and our guide on why car loan rates do not follow the cash rate explains the gap. Still, the minutes give a few practical points for applicants:
- Check your rate type. A fixed-rate loan keeps its agreed rate and repayments under the contract. A variable-rate loan can change when the lender reprices. Our fixed or variable loans guide covers the trade-off.
- Leave room in your budget. If your repayments only work with no buffer, a further rise in living costs or rates could squeeze you. A smaller loan amount or a larger deposit may give you more breathing room.
- Compare the full cost. Look at the comparison rate rather than the headline interest rate, and keep the amount, term and any balloon the same across quotes.
- Know how long a quote lasts. If you are partway through buying a car, car loan pre-approval and a formal approval have different terms. Ask the lender which rate applies to your stage and when it expires.
If you are ready to compare options, you can explore car loans, personal loans or refinancing an existing loan. Our lender profiles set out published rates and features, and the loan calculators can help you test repayments at a higher rate before you apply.
What to watch before the November RBA decision
The minutes say the outlook depends on the Middle East, external demand, domestic capacity pressure and how inflation expectations evolve. Members said they would "remain attentive to incoming data". The Board next meets on 2 and 3 November 2026, according to the RBA's published meeting schedule, and the minutes from that meeting are due two weeks later.
Between now and then, the useful habit is to treat any quote as a snapshot. Rate decisions, lender repricing and your own living costs can all change the numbers. This article is general information only and does not take your circumstances into account. It is not financial advice, so consider whether a product suits your situation and read the lender's terms before you apply.
Source: Reserve Bank of Australia, Minutes of the Monetary Policy Board Meeting, 28 and 29 September 2026 (published 13 October 2026); RBA cash rate target table; RBA board meeting schedules. All checked on 15 October 2026.
